Economics · International Macroeconomics
In the Mundell-Fleming model under a fixed exchange rate system, currency devaluation results in:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Leaving aggregate income and net exports completely unchanged
- 2Shifting the LM curve to the left, reducing net exports and lowering aggregate income
- 3Shifting the LM curve to the right, reducing net exports and lowering aggregate income
- 4Shifting the IS curve to the right, expanding net exports and raising aggregate income✓
Correct answer
Shifting the IS curve to the right, expanding net exports and raising aggregate income
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